Business confidence in car and motorbike sector falls despite higher turnover

The car and motorbike industry sees sales rise 33.7% in the second quarter of 2023 compared to the same period a year earlier. The increase can be partly attributed to rising sales of electric vehicles combined with price increases and clearance of back orders. Interestingly, business confidence is declining at the same time.

This is evident from figures released by Statistics Netherlands (CBS). The CBS divides the market into various segments:

The segment showing the highest sales growth is 'Trade and repair of passenger cars'. This segment saw revenue rise 49.1% in the second quarter of 2023 compared to the same period a year earlier. This is the largest increase in turnover since 2005.

CBS attributes the increase largely to the growing demand for electric vehicles, from which the segment is benefiting. However, consider also the delivery of outstanding orders and orders.

Importers of new passenger cars also performed well in 2Q2023. Sales in the segment rose 29.2% compared to the same period a year earlier. In this case too, clearance of back orders plays an important role. However, CBS states that this catch-up seems to be over now, although it is unclear what impact this will have on the segment's sales figures.

Turnover from heavy commercial vehicles also grew. This segment recorded a 15.8% increase in sales in the second quarter of 2023. Here, too, electrification plays an important role; parties in the segment are experiencing increased demand for electric buses, among other things.

Other segments are also doing well. These include specialised repair shops (11.4 per cent), trade in auto parts (8.2 per cent) and trade and repair in motorbikes (1.4 per cent). CBS attributes these increases to, among other things, higher raw material prices of parts and a shortage of used cars, which is pushing up the price of used motorbikes.

Interestingly, business confidence is actually declining despite the positive turnover figures. Business confidence in the car and motorbike industry comes in at -10 at the start of the third quarter of 2023. At the beginning of the second quarter, it was still -0.9. This puts business confidence in the sectors lower than in other sectors; measured across all industries, business confidence comes to -8.3.

A talent shortage in particular is putting pressure on the car and motorbike industry. Almost half of all companies in the sectors (47%) reported experiencing a labour shortage at the start of the third quarter. This does reduce the shortage slightly; at the beginning of the second quarter, the percentage was still around 53%.

At the same time, the number of job vacancies in the sectors actually increased slightly. A total of 9,300 vacancies were filled in the second quarter of 2023, up from 8,400 vacancies in the first quarter.

Although figures from Statistics Netherlands (CBS) show that demand for electric cars is rising, the Dutch remain cautious. Car websites Gaspedaal.nl and AutoTrack conducted a survey of 2,000 car owners who currently still drive petrol-powered vehicles. Of these, 96 per cent say they have no intention of switching to electric driving, reports the AD.

This is striking as there are all sorts of factors that actually make electric vehicles more attractive at the moment. These include the availability of subsidies and a road tax exemption, as well as sharply increased fuel prices that make driving on petrol more expensive.

At the same time, prices of electric vehicles are falling, largely due to a price war Tesla is waging against other car manufacturers. For instance, Tesla recently implemented price cuts of up to 22,500 euros. The average price of an electric car was still over 41,000 euros at the beginning of this year, and has now fallen to around 36,500 euros. Incidentally, the price cuts do not mean that electric cars are now cheaper than petrol cars. The average price of an electric vehicle is still well above that of a petrol variant.

The role played by the purchase price is clearly reflected in the figures shared by Gaspedaal.nl and AutoTrack. Over half of the respondents, for instance, cited the high purchase price as the main reason. Concerns about battery condition (37%) and range (25%) also play a role.

Although a lower purchase price may well boost enthusiasm for electric vehicles, Renault CEO Luca de Meo is calling on European car manufacturers not to be tempted into a price war. “It is important to avoid a price war in the short term,” says De Meo in an interview with Bloomberg during IAA Mobility in Munich, Germany. The Renault chief executive highlights the risks. For instance, price cuts implemented in particular by Tesla and Chinese car manufacturers could put European manufacturers under pressure and squeeze profit margins.

Author: Wouter Hoeffnagel
Photo: Free-Photos via Pixabay